Algeria’s economy saw growth of 4.1 percent in the first half of 2025, with GDP for the year expected to reach 3.8 percent, according to the World Bank’s Fall 2025 Algeria Economic Update. Non-hydrocarbon sectors experienced a rise of 5.4 percent, and inflation eased to 1.7 percent over the first nine months, helped by lower food prices and a stable exchange rate.
Growth was supported by gains in industries and services outside hydrocarbons. However, hydrocarbon exports fell while imports increased, reflecting investment demand but also creating pressure on external accounts. Hydrocarbon revenues remain below previous levels, underlining the need for continued efforts to increase revenue and improve public spending efficiency.
"As Algeria works to strengthen competitiveness in a changing global environment, the country can build on recent gains and continue moving toward faster private-sector-led growth that creates quality jobs and supports innovation. Clear and predictable policies, together with measures that encourage investment and innovation, can sustain progress and reinforce competitiveness," said Cemile Hacibeyoglu Ceren, World Bank Group Resident Representative for Algeria.
The World Bank projects that non-hydrocarbon growth will remain active but may slow somewhat in 2026-2027, with overall GDP growth forecast at 3.5 percent in 2026 and 3.3 percent in 2027. Continued reforms aimed at improving the business environment, increasing access to finance, and strengthening competition are identified as essential for supporting economic diversification and job creation.
"Easing price pressures and solid non-hydrocarbon activity are encouraging. Maintaining this progress through continued reforms can help support stronger, sustainable, and diversified growth," said Daniel Prinz, World Bank Economist for Algeria.
The report also highlights the importance of including climate issues in development planning as partner countries move forward with decarbonization initiatives such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which is set to be introduced next year.